Two drugs make up about two-thirds Eli Lilly‘s (NYSE: LLY) top line, generating approximately $12.8 billion in revenue in the first quarter of 2026. Two drugs, Mounjaro and Zepbound, are growing strongly as well, with sales up 125% and 80% year-over-year, respectively, in the first quarter. So why should investors care that Eli Lilly recently spent $3.8 billion to buy three vaccine-focused companies?
The market is very focused at other times
To make the story of Mounjaro and Zepbound even more interesting, those two drugs are GLP-1 weight loss drugs. This is a hot new category in the pharmaceutical industry that Eli Lilly is currently leading. In fact, the stock is increasingly looking like a one-tick pony, and investors are happy about it, noting that the price-to-earnings ratio is 39x high. The average pharmaceutical stock has a P/E of about 24x.
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Eli Lilly’s $3.8 billion to buy Curevo, LimmaTech Biologics AG, and The Vaccine Company will quickly build its presence in the infectious disease space. Which, for now, will be irrelevant to its business. Soon, investors will be watching Mounjaro, Zepbound, and the company’s recently released GLP-1 pill, Foundayo. But the bigger story that investors may be missing is important.
Eli Lilly knows the drug business well enough to prepare in advance
The company’s GLP-1 portfolio is an important story, but one that comes with an expiration date. That’s how the pharmaceutical industry works, as drugs have limited patent protection. Eli Lilly knows that the current positive momentum won’t last forever. Even if investors are not thinking about the next decade, Eli Lilly.
This is why building an infectious disease business is so important today. Although it seems that it is not on the side compared to GLP-1 drugs, basically Eli Lilly is using today’s success to build a strong business in the long term. While there’s no way to know if any of the three vaccine-focused businesses it’s buying will turn out to be big winners, it’s 100% certain that GLP-1’s current success will, at some point, fade. Adding fuel to the fire with this vaccine is good financial management.
Eli Lilly is cost effective and focused on remaining an industry leader
While value investors may not like Eli Lilly, growth-oriented investors will be attracted to it. The GLP-1 issue is the main reason for the purchase, including new types of GLP-1 drugs the company has in the works that may be even more effective than its current offerings. However, management’s clear intention to leverage its GLP-1 success to create a more differentiated business is likely to be just as important, if not more so. It’s decisions like these that lead to long-term success in the drug industry.
